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Wednesday, January 3, 2007
The value of stacking bricks
The Atlanta Journal-Constitution
While vacationing in Brazil, I stopped while bicycling past a small mom-and-pop clay building block factory to watch workmen loading a flatbed truck. The workers, about 10 men who appeared to be no older than their early 30s, were industrious, steady to the task of loading the blocks, which had been moved from inside the factory to the outside, where they were stacked. The truck was pulled alongside and about five of the workers hand-loaded them, four at a time, onto the bed of the delivery truck.
I watched the process with some fascination, owing to the debate leading up to the elections in the U.S., about raising the minimum wage, which in Brazil is now being increased from about $163 per month in U.S. dollars to about $177 per month, starting in April. In the brick-hauling operation, I guessed that a good forklift could have eliminated the jobs of seven of the young men loading the building blocks. It was a time-consuming, highly inefficient process, economical only because their wages, all combined, didn’t raise the price of the bricks to more than the ample competition in the area would allow.
At some point, if wages pressed higher, a smart accountant would have advised the owner to invest the capital in a forklift, to spend a few dollars in training an operator, and to fire the excess workers. The bricks they were making were very low tech. The margins couldn’t have given the owner much wiggle room; his options when faced with higher labor costs, it seemed to me, were to invest capital or close shop.
And what of the 10 workers? Ideally, a country’s education system and economy advance in sync, so that job skills and needs align. But in the case of the brick factory workers, the alignment has occurred at the low end. An act of Congress couldn’t change that.
The new Speaker of the U.S. House, Nancy Pelosi (D-Calif.), intends to make raising the federal minimum wage a first 100-hours priority when the 110th Congress convenes on Thursday. The legislation, which is likely to bypass the House Education and Workforce Committee and go straight to the floor for consideration, would likely raise the federal minimum wage from $5.15 per hour to $7.25 in phases.
Brazil is not the U.S. But the fact remains that some labors are not worth much. Employers may be able to pass it along in higher prices but in many instances, as with the brick-stackers in Brazil, they can’t. And in that case, either the owners find alternatives to unskilled labor — or they close shop.
In addition to raising the minimum wage, the Pelosi Democrats plan to pass half a dozen pieces of legislation in the first 100 hours. Among them are a ban on gifts from lobbyists to members of Congress, an end to Bush administration restrictions on federally-funded stem cell research, full implementation of 9/11 commission recommendations, and federal government price negotiation for prescription drugs.
Passing them through the House and through the Senate are entirely different matters, of course. But the question here is whether the nation will be better or worse off if Pelosi Democrats’ agenda succeeds.
